India : RINL to Offset Rebar Shortage with Semis

This is on account of a scheduled maintenance shut-down of its rebar mills during July and August, 2019.

Vizag Steel’s total saleable steel production is about 500,000 MT per month out of which the rebar component is around 160,000 MT. The public sector long products major owns 6 rolling mills, which will undergo regular yearly maintenance shut-downs. Sources indicated that each of these 6 mills will be out of operation for 10 to 12 days, in a phased manner, starting July and ending September, 2019.

Consequently, this move will translate into a total reduction in the availability of about 160,000-180,000 MT of rolled products during these 3 months put together, of which around 60,000-70,000 MT will be in rebars, it is learnt.

However, the company has aligned these repairs with regular capital repairs of the upstream units, like steel-making converters, blast furnaces, sinter machines etc.

Target of 6.4 MnT of liquid steel production in FY20

Vizag Steel targets an annual output of 6.4 MnT of liquid steel/5.8 MnT of saleable steel in FY20.

Speaking to SteelMint earlier this month, Mr P K Rath, the Chairman-cum-Managing Director (CMD) of RINL, said, in the current financial year of 2019-20 (FY20), the company has taken a target of 6.4 MnT of production of liquid steel. In 2018-19, the target had been 6.1 MnT of liquid steel production, out of which the PSU had produced 5.5 MnT.

The company, at present, is now focused on taking its production volume up from the present 6.3 MnT to 7.3 MnT. Rath said: “I will put it this way - up to September, 2019, we should call it a 6.3 MnT plant and beyond September 2019 it should be totally a 7.3 MnT plant.”

Low rebar demand, rising stocks

Indian rebar prices are falling on low demand and rising inventories. Meanwhile, Indian rebar prices have been subdued over the last few months. SteelMint’s data shows that since March 2019, prices have climbed down from INR 42,000 per MT to lower than INR 40,000 per MT by the end-June, 2019. The inventory being held by the large, medium and smaller mills is high in comparison to their regular levels. It was expected that the larger state-owned mills would roll over their rebar prices in July 2019 against the backdrop of the Budget that was placed by the government on July 5, 2019. Many said the likely roll-over in prices could be on account of the wait-and-watch policy adopted by the mills over the kind of Budget allocation made for infrastructure this fiscal (FY20) compared to FY19.

However, the price rollover may not support buying due to lacklustre demand amid sluggish construction activities. Overall, Indian steel demand has been subdued for the last few months on account of liquidity issues. The market has been plagued by a delayed payments cycle. If domestic demand continues to remain weak in the coming months, it is likely that there will be more bloom/billets export tenders from Vizag Steel.